Weekly Market Recap Manufacturing survey data for July released this week appeared robust for the US, China, and the EU; but mixed for Japan and weak for the UK. The Bank of England cut interest rates and announced other measures to support the UK economy, in a reaction to expected weaker growth post-Brexit. The Reserve Bank of Australia also lowered interest rates, primarily to help spur growth. In the US, jobs data was robust and vehicle sales for July were strong. Oil prices temporarily dipped below $40 this week for the first time since April. A reminder this week on the importance of sector diversification. We often discuss how diversification by country and asset class can help your portfolio. This is valuable for sectors as well, and stock-diversification across multiple sectors can also help smooth returns. For reference, sectors are groups of stocks operating in the same industry. For example, over the past 12 months, technology, utilities, and consumer staples have been the best performing sectors within the S&P 500. On the other hand, financial firms and energy producers have lagged. If you pick stocks, you have the risk of picking the wrong stock, and you also have the risk of unbalanced sector exposure. Thus, holding sectors in combination, such as by tracking a broad stock market index, can smooth your returns over time. Notes:
Bank of England Statement
http://www.bankofengland.co.uk/publications/Pages/news/2016/008.aspx
Reserve Bank of Australia Statement
http://www.rba.gov.au/media-releases/2016/mr-16-18.html Disclaimer:
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